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Executive Summary

JAPAN GOVT. AIMING FOR 12-MONTH APPROVAL DEADLINE FOR PROCEDURE KITS, pursuant to an offer made to U.S. pharmaceutical trade negotiators at an Oct. 11 bargaining session in Tokyo. Procedure kits, like Abbott's Add- Vantage system, which contain self-enclosed, ready-for-mixing packages of drug and diluent, have been treated like generic products in Japan, because they are generally composed of previously approved products. Generic drugs are approved within a 24-month period, under a schedule proposed by Japan. Ironically, new drug products will be approved within an 18-month period under the schedule offered by the Japanese ("The Pink Sheet" Sept. 16, p. 9). The U.S. negotiators had initially urged the Japanese to consider procedure kits as new drugs despite the status of their components, so that their approval time would be reduced to 18 months at most. Reportedly, procedure kits like systems currently marketed by Abbott and Baxter-Travenol, are expected to create substantial demand in Japan due to their cost-savings potential to hospitals. The Tokyo negotiation was the third session of the ongoing U.S.-Japan trade talks to focus on the pharmaceutical/medical device industry. "Expert" panels from both sides are tentatively scheduled to meet in November to discuss vitamin and blood product regulation. The two full delegations for the health trade segment plan a "wrap-up" plenary session in December to discuss resolutions to the issues. At the Aug. 20 talks in Hawaii, the Japanese delegation offered to establish by Oct. 1 an approval time clock by which new drugs would be cleared within 18 months, medical equipment within 12 months, in vitro devices within six months, and me-too products within four months. The Japanese explained at the Oct. 11 session that the four-month deadline applied only to generic devices and that generic drug approvals were subject to a 24-month time clock due to the substantial backlog of applications. Although the Japanese said the 24-month period was temporary and would be reduced as the backlog is decreased, they would not predict when the problem could be resolved. Because most Japanese patients are covered by a govt. health insurance program that reimburses MDs or hospitals for listed drugs, reimbursement-setting policy is crucial in U.S. industry's attempts to penetrate the Japanese market. In the past, Japan listed reimbursement levels annually, meaning a mfr. could wait up to a year before a newly approved drug would be marketed. The Japanese have agreed to publish its lists in the spring and fall; the U.S. was pushing for a quarterly publication schedule. Device mfrs., however, are in a Catch-22 position: Japan insists that high-tech devices, whose rates can be set less than once annually, must be shown to be available throughout the country before the govt. will set a reimbursement rate, but marketing is severely impaired without reimbursement. The U.S. has also requested that foreign firms be permitted to participate in the reimbursement-setting process. Japan insists that the sessions of the Chuikyo, or Social Insurance Medical Affairs Council, should not be made public because companies would exploit the opportunity to discover competitors' proprietary information. A Japanese proposal for handling "unfriendly" transfers of marketing approval from Japanese licenses to U.S. mfrs. was rejected by the U.S. delegation. Japan's proposal involved termination of the license and reapplication for approval by the U.S. form under relaxed requirements. The U.S. delegation argued that the Japanese data still required for approval were already submitted to the Ministry of Health & Welfare and that U.S. firms do not have access to it if former licensees are reluctant to relinquish approval to the U.S. firm. Japan said it would try to develop another proposal.

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